Oil traders spent Monday celebrating the end of a war. The harder job, actually moving crude through the Strait of Hormuz again, starts this week and will take far longer than a single trading session.
Washington and Tehran are due to sign their agreement on Friday in Geneva, with Pakistan acting as the go-between. The deal ends nearly four months of fighting and lifts the US naval blockade on Iranian ports. It also reopens Hormuz, the narrow channel that carries close to a fifth of the world's seaborne oil and liquefied natural gas.
Monday's sell-off sent both benchmarks to their lowest levels since the war began, and they have hovered there since. WTI now trades at $76.34 a barrel and Brent at $79.38, more than $40 below the wartime peak.
A traffic jam at the world's busiest oil chokepoint
President Donald Trump posted that tankers were already "starting to move, many loaded up with oil," and predicted the strait would be "completely open" by Friday. The official picture is messier. A US military advisory issued Monday said the blockade of Iranian ports stays in force until the signing.
The bigger obstacle is the backlog. The International Chamber of Shipping counts roughly 500 vessels waiting to transit, with about 20,000 crew stranded on board. Even after the political green light, they cannot all pour through at once.
Why the all-clear won't come Friday
Insurers are the real gatekeepers, not politicians. Maritime security firms told Reuters that clearing mines from the waterway could take 40 to 50 days before underwriters sign off on safe passage. Until then, war-risk premiums stay punishing and many owners will simply wait it out.
Gulf producers face their own delays. Saudi Arabia, Iraq, Kuwait and the UAE shut in barrels when the strait closed, and bringing that supply back is not a flip of a switch. Tanks need refilling, terminals need crews, and damaged infrastructure needs repair.
Refined fuels heal slowest of all. Diesel and jet fuel absorbed the worst of the crisis, and those markets usually lag crude on the way down.
What to watch
The deal still has loose ends. Israel has signaled its troops will stay in territory captured during the fighting, and Tehran has tied any durable peace to Lebanon. A 60-day clock is also running on the hardest question of all, the future of Iran's nuclear program.
For now the market is trading the headline. If the first tankers line up cleanly behind a Friday signature, crude has room to fall further. If the deal frays, the $40 it has shed since the peak could come back in a hurry.